business Component 3

• what are the internal causes of change 4 factors


  1. changes in management style

  2. change in business ownership - investing in new tech can change production methods

  3. introduction of new technology- can change production and operational methods cad and cam

  4. change in business size business can grow organically
• external causes of change 6 factors


  1. introduction of new technology -such as the sudden shift to

  2. labour market -the cost of labour and minimum wage will affect the competitiveness of firms

  3. changes in economic conditions- the cyclical nature of the UK economy such as a global recession

  4. competition -existing competitors can change their strategy such as the use of predatory pricing

  5. consumer tastes and preferences completely alter demand patterns

  6. new legislation -governments can change legislation both to limit a business activity and alternatively to free up activity
• planned and unplanned change


  planned change is created internally and is structured within a timetable. clear objectives for the changes are established

  
  

  unplanned change occurs in response to a shock in the business and is often unstructured and under-resourced
• effects of change (5)

  1. shorter product lifecycles -this as external changes in demand can affect the lifespan of a good or service

  2. diminishing brand loyalty - change in the market may make it easier to enter the market and grab market share this would reduce monopoly power and increase marketing cost

  3. new products need to be developed- to cater for changing consumer tastes

  4. change in a business size can grow organically carefully building on product ranges

  5. introduction of new technology can affect both the pattern of consumer demand and methods of production

  6. production methods may have to be changed to match consumer demands( such as the increased demand for streaming rather than live tv )

  7. retraining the workforce - to be able to respond to change more quickly ( during the Covid pandemic retraining to use Zoom in order to operate during lockdown)

  8. in need of a more flexible workforce (covid). increase compliance with changing legislation which could raise costs for example health regulation of tariffs on Russian oil
• how to effectively manage change


  1-employee preparation this is the first stage in effective change management this is when people prepare employees for a change it usually involves reskilling and allowing employees to carry out new tasks (talk about deindustrialisation in areas)

  2-increased research and development (r&d) expenditure change is preparing employees for change

  3-additional capital investment change can create the need for investment in new technology and new equipment( global shift )
• how can change be implemented

  jstorey four methods of implementing change

  1. negotiated total package

  2.negotiated piece meal initiatives

  3.imposed piece meal initiatives

  4.imposed total package
• what is negotiated total package


  managers and workers decide on how cahnge will be implemented and will be done all in one go
• what is negotiated piecmeal inititative

  this is when change is disuccuseed with consultants and agree on various changes as they become neccesarry for example new shift patterns
• what is an imposed piece meal iniative

  managers plan and implement changes such as a move to flextime or the development of quality c in order to solve particular problems
• what is imposed total package

  this is when senior management plan and introduce a significant change all at once without consultation may be resisted by middle managers and workers
• 3 reasons for resistance for change

  1

  workers fear the unknown such as hours worked, redundancy, earnings, and movement to a new technology

  
  

  2

  supplier resistance may be resistance as and when needed due to increasing pressure to perform and reliance on high productivity.

  smaller suppliers may have no choice but to accept the situation or lose a valuable customer

  3

  owner resistance owners fear the business will suffer due to increased risk and unpredictability which may lead to shareholders selling shares displeasing the owners
• how do a business stop resistance to change to change

  lewis three-step theory

  1. unfreezing

  2. change or transition

  3. refreezing
• organisation is sometimes described as the way we do things around here. It reflects the beliefs norms and values of a business and often proves to be a tricky thing to change


  unfreezing this involves creating a motivation for change. creating a realisation among employees that change is necessary
• what is a business risk

  is a given set of circumstance or factor that may have a significant negative impact on the operation or profitability of a given business
• what are the 4 different types of risk

  strategic - this is the entrance of a new competitor coming onto the market

  finacial -the impact of recession decreasing demand in a firm and lowering cost

  compliance risk- this is lack of response to health and saftey legislation which can result in a unhospitable workplace for customers
• what can risk be catogrised into ?

  insurable - this is usually quantitative risk such the cost to repair and recove capital machinery

  interruption insurance
• what structure may a business use to to implement change

  J.Storey Four Methods
• what can J.storey four methods of change be catagorised into

  negotiated or imposed

  piecmeal or total
• what methods is use to stop ressistnace to change within a buisnnes

  lewis three-step process

  1. unfreeze- getting rid of norms and certain behaviours

  2. change or transition- lewin described the period of transitions as a potentially tricky time as a worker is moving to a new way of doing this they are given time and support via training to overcome this

  3. Refreezing - this is the final stage in the change process

  which usually involves workers given time to adapt so education and monitoring are decreasing to prevent continual change

  
• problems with change


  could go against the organisational culture which may increase labour turnover rates

  
• how to know if the change is successful

  If the leader of an organisation has planned the process of change effectively, then a clear set of objectives have been identified from the outset

  1-better delivery times

  2-production defects are reduced

  customer satisfaction surveys reduced

  3-market share is an increase

  4-sales turnover increases

  5-profit-'The bottom line
• internal risks examples 4

  1. Public relations failures- lack of government support to help the business

  2. product failures

  3. failure of equipment

  4. employee error

  
• external risks


  1. Natural disasters

  2. supply chain problems

  3. economic factors

  4. legal challenges
• What is risk management?

  what is risk management this is the process of understanding and minimising what might go wrong within an organisation. It involves the activities undertaken by a business which are designed to control and minimise threats to the continuing efficiency profitability and success of its operations. the risk management process includes
• examples of ways to mitigate risk 4


  1-proper training of staff to reduce the amount of qualitative risk such as the internal risk of employee error

  2-backing up of IT systems regularly involves mitigation in case of the internal risk of breaking off equipment

  3-put robust quality control system in place this would mitigate internal risk and maintain a level of customer relations within the business

  4-install a sprinkler system mitigates external risks such as arsonists and also prevents compliance risks within the business
• contingency plan benefits (5)

  1) usually will take time management

  2)time and cost money usually to implement

  3)immediate advantage made more resistant

  4)can make more of a difference between failure and success

  5)can prevent any damages done to the business brand i.e Tesco horse meet scandal
• cost a contingency plan


  1)has to be constantly updated

  2)has to be constantly reseach and produced

  3) may not always be successful as the plan has to be very dynamic
• political external factors which can greatly affect a business

  1) Instability - against business no support such as Eat to help out

  2) National security- can contain globalisation and increase regulation of goods and services increasing costs

  3) Major trading partners - trade blocks incentivise trade and business competitiveness after leaving the EU greatly leading to less investment due to more uncertainty

  4) changes in governments- new governments may well have a more or less positive attitude towards business activity

  5) pressure groups- the activity of such groups can have a significant impact on political decision making such as the food industry and veganism protesters
• what is an economics factor


  an economic factor is business activity which is hugely affected by the state of the economy and during the time of recession many businesses will fail to survive

  -governments decision will greatly affect this
• what is the 3 ways a government may affect a business

  1) taxation -may be direct or indirect affects consumer spending and will impact the majority of businesses

  2)subsidies- are payments to producers there for increasing output

  3)expenditure- this is the government's role as a purchaser of goods and services( it Is estimated the government purchases 100 billion a year from private companies)
• other economic factors which affect a business

  1)inflation- government measure inflation through the use of regular pricing of nominal goods high inflation can lead to uncompetitive exports and result in less revenue for the business

  2)deflation- increases the cost of loans and would delay consumer spending

  3)interest rates would affect the ability of individuals and firms to invest due to returns and loan repayments

  strength of the pound

  4) strength of the domestic currency if it increases may result in less competitive exports and less revenue for firms

  5)unemployment -structural, cyclical, frictional if high can reduce the demand for total goods and services
• social factors which cange a business


  1)demographic measures measure the change in the structure of the population

  - the overall most important thing is the structure of the population i.e baby boomers have a high amount of disposable income in the economy aid 25 % of first-time buyers today

  2) migration transfer of skills the brain drain and the multiplier effect

  3) lifestyle changes

  -increase women's economically active

  -society becoming more health conscious can affect demand and profit for fast food firms as consumers become more aware

  4)cultural changes due to different cultures can affect the demand for certain products

  5) social changes such as fashion changes consumers are now happy to pay 3.00 for example
• technological cahnges in the workplace

  1)automation

  used to continue and carry ou repetitive tasks within the manufacturing industry

  i.e banks,warhouse roles,online service,utilites
• how is information and communication used

  1)internet marketing sales are increasing year on year business that have already lucrative makrekt have seen market share values rockt

  2) web base customer relaitonships

  3) bb2b sharing tools and resources

  4) manufacturing within what if analysis and cad and cam manufacturing
• According to kotter and Schlesinger 4 reasons why there may be resistance to change

  -parochial self interest -affects on them selves ie stakeholder want to protect assets

  -prefer the status quo (aka the way they doing thing around here) happy to keep the business as it is

  -misunderstanding and fear of new objectives

  - different view owners and workers may have different ideas
• According to kotter and Schlesinger what are the ways to over come resistance

  Education and communication - providing stakeholders with all of the necessary information to help them understand the reason for change, how it will be implemented and the proposed outcome

  o Participation and involvement - providing a sense of ownership to stakeholders so they feel part of the whole change process

  o Facilitation and support - providing the necessary skills and resources to help stakeholders feel more confident with the change process

  o Negotiation and agreement - increase two-way communication by bargaining with stakeholders and if necessary making compromises to the change process

  o Manipulation and co-option - use of project champions who may receive incentives and are tasked with winning around others

  o Explicit and implicit coercion - pushing change through despite resistance. This may be a last resor